Accepted Answer

Hello XXXXXXXXXXX, The amount you use to payoff the student loan will be conidered a gift even though you are the co-signer, the student took out the loan and is the one that will receive the deduction. A separate annual exclusion applies to each person to whom you make a gift. For 2009, the annual exclusion is $13,000. Therefore, you generally can give up to $13,000 to any number of people in 2009 and none of the gifts will be taxable. Generally, you must file a gift tax turn on Form 709. If you give more than the annual exclusion amount to one person in a single year you'll have to file a gift tax return. But you still won't have to pay gift tax unless you gave given a very large amount. The rules let you give a substantial amount during your lifetime without ever paying a gift tax. As of 2008 the amount is $1,000,000. Any amount you use out of your lifetime gift tax exclusion counts against the estate tax exclusion, which is $3,500,000 as of 2009. As far as paying some in 2009 and then some in 2010 that would allow your son to use the maximum for each year of interest paid as a deduction. I hope this information is helpful,

Expert:	Robin D
Pos. Feedback:	100.0 %
Accepts:
Answered:	11/6/2009

Senior Tax Advisor 4

15years with H & R Block. Divisional leader, Instructor